EUR/USD: Levels, Ranges, Targets

 

 

 

EUR/USD managed today so far in the last 4 hours to dead stop 1.1192 and 1.1197. Most important is the 5 pip differential.
Dead stop at the 5 day average is due to location of the 5 day average at 1.1192. Then EUR/USD reversed.
Next EUR/USD broke the 5 day average at 1.1192 and dead stopped at 1.1197 then reversed. Why Dead stop at 1.1197 is due to a break of the current 5 day average at 1.1192 becomes 1.1197. The break point differential is 5 pips. Today EUR/USD is working on the 5 differentials.
To add further to the power of 1.1192 and 1.1197 is the 10 day average at 1.1203.
EUR/USD below the 5 day average at 1.1192 means the 10 day is located at 1.1203.
From 1.1192 to 1.1197, the 10 day is located from 1.1205 to 1.1206. To break 1.1192 means a 13 to 14 pip differential must carry EUR/USD to 1.1205 to 1.1206. How important is original 1.1203 is its just a break point as 1.1197 rules for today. But the 5 day at 1.1197 upon a break higher becomes 1.1198 and 1.1200 upon a break the 10 day becomes 1.1207 and a 9 pip differential.
The power of the 5 day at 1.1198 means a break higher then the 10 day becomes 1.1207. At 1.1200, the 5 day becomes 1.1199 and 10 day remains at 1.1207. The differential closes to 8 pips.
The next break point at 1.1202 then the 5 day becomes 1.1200 and 10 day at 1.1207. The differential closes to 7 pips. No changes from 1.1203 to 1.1205. At 1.1206 and 4 pips from 1.1202, the 5 day becomes 1.1201 and 10 day 1.1207. The differential closes to 6 pips.
Next break point at 1.1207 then the 5 day remains at 1.1201 and 10 day moves 1 pip to 1.1208, a 7 pip differential. The formal break of the 10 day is located at 1.1209 and 5 day remains at 1.1201.
At 4 am EST this morning, EUR/USD target issued at 1.1226 against caution at 1.1201. EUR/USD dead stopped at 1.1228 and reversed.
What is 1.1226. The big break point is far above at 1.1248. Why far means EUR/USD doesn’t have the power to climb to 1.1248 this morning. nor can EUR hold if 1.1248 traded on a fluke. Later, maybe but not today for 1.1248.
At 1.1226, the 5 and 10 day aligned as 1.1206 and 1.1210. At 1.1228, the 5 and 10 day aligned as 1.1206 and 1.1211.
The upside targets to the above averages for perfect alignment were 1.1177, 1.1189 and 1.1207. Out of bounds to extremes were located from 1.1222 to 1.1237. Most vital was 1.1225 above 1.1198. My target at 1.1226 violated by 2 pips while 1.1225 violated by 3 pips. If EUR travels higher, it must correct lower.
My bottomside long was located at 1.1143. From 1.1192 informed 1.1147, 1.1154 and 1.1162 would struggle to attain and hold. A break of 1.1197 and 1.1198 informed the bottomside points were literally impossible as new extremes were located from 1.1171 to 1.1180 and even 1.1184. The break of 1.1197 and 1.1198 offered new supports to take EUR/USD higher. What a difference for 5 pips.

Brian Twomey

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EUR/USD, USD, Yield Curves: Levels, Ranges, Targets

 
Hodge Podge. Overall purpose of a Yield Curve serves as an economic indicator. The basics. An upslope curve when short rates are below long 10, 20, 30 yield interest rates informs future economic growth. This shape looks like a perfect trend line.

Inverted Yield curve when short interest rates are above long rates informs economic down turn or possibly recession is here. Bumped Yield Curve when middle rates 5 to 7 year are above short and long rates. Economic caution warranted.
Flat Yield Curve. When short and Long Yield rates are the same. This is trouble and means dead economic times. Why follow the yield curve and why Flat is vital to current economic conditions is because when short rates rise generally long rates fall.
The current 30y to 1 year spread runs 1.79, 10 to 2 runs 0.95 and 10y minus 3 month = 1.31. The spreads warns against raises due to possibility to cause a Flat Yield Curve and dead economic times. A flat yield curve to unwind generally means short interest rates must fall to allow long rates to rise. The perfect trend line is again seen.
But Yield curve shapes take time to develop, more time to maintain and hard to unwind when flattened. The Fed’s 3 rate rise dream places short rates directly close to the 1.79 spread. Long rates must rise before the Fed can raise and not jeoparrdize economic growth. The 10 year yield against an 11 point monthly range fails to make the case to raise Fed Funds. Yields are ranging, not trending therefore only a few points may be gained in any given month and not enough to continue the current upslope yield curve.
For years, the Fed speculated to add another interest rate to the current mix. Think markets are dead now. Add another rate and American markets will trade like the Norweigan stock market at 6 points per day.
Why importance to markets in yield curves is because Commodity prices are found on the yield curve as commodities since the start of time travel up and down the yield curve. Years ago, Commodities traded up and down the interest rate curve but as yields were introduced, Commodities found a new home.
How about write about Interest rates, market structures or forecast GDP or a fundamental announcement then zero views. Mouth dropping scary to commentary on current traders. This allows anybody to write thin air information and its accepted as true and no checks. My writings and forecasts are the result of hard work and effort to always be correct and perfect. Others refuse to inspect and analyze the masses of data as I do.
EUR/USD. Most vital point today, 1.0985 and 1.1049 vs 1.1173 and 1.1238.
Further lesson. USD.
USD/CAD vital points. 1.3423 and 1.3457 vs 1.3492, 1.3526 and 1.3545.
USD/JPY vital points. 110.43 and 110.72 Vs 111.28, 111.44 and 111.57.
USD/CHF. Vital points. 0.9767 and 0.9792 Vs 0.9818, 0.9842 and 0.9856.
Stated in order of movements. USD/CAD is best performer in movements. Its built into CAD’s price and rarely changes.
2nd is USD/JPY then comes slowest mover in USD/CHF. USD/JPY trades between USD/CHF and USD/CAD. Its the factor of each’ pair prices. If USD/CAD was a 0 point currency pair then USD/JPY would become the big mover.

 

Brian Twomey

USD/JPY and 10 Year Yield: Levels, Ranges, Targets

USD/JPY and the 10 year yield Correlate at the 1 year monthly average at 89% and not an unusual reading for a 1 year average however at 89% warns a Correlational top is near. The top hits a brick wall at 96%. The bottom correlation scale runs to + 52% then on a break the correlation turns negative.
A Correlation in total is a + 1.0 to minus 1.0 scale. The positive side travels from +50 to +1.0 while the negative bottom scale extends from minus 50 to minus 1.0. Rarely, if ever, will + 1 or minus 1 ever calculate due to the interrelationship between 2 prices. Rho informs this statement is true but RHO also instructs the 1 year USD/JPY V 10 year yield Correlational range is located from minus 65% to +97%. A currency pair for example to hit its brick wall at 97% and drops to 52% amounts to roughly a 200 pip move. USD/JPY above 111.40 is already out of range at the 1 year average.
From 89% at the 1 year average, the Correlation then drops to +52% at the 2 year monthly average and extends downward to + 19% at the 6 year. From the 7 to 9 year, the correlation turns negative and + 11% at the 10 year and dates to 2007. The Slope is positive from the 1 to 6 year and explains the positive correlation while the 7 to 9 year Slope is negative and reveals why negative Correlations.
The 10 year to travel higher from the 2.25 close must break 2.26, 2.41, 2.51 and 2.68. Lower means breaks at 2.24, 2.14, 2.09 and 2.06. What drives the USD/JPY and 10 year relationship is the 1 year average at 2.09 and 2 year at 2.06.
The average distance for the 10 year Vs USD/JPY is 11 points. Part of the paltry 11 point range is explained by not only positive and negative correlations but positive and negative slopes. The 10 year is trapped inside its range. Note the 2.25 close Vs immediate break points at 2.24 or 2.26. The 10 year closed dead center.
Range containment is forcing massive pressures upon current prices which means the 10 year must move. The next move is lower to the 2.14 and 2.09 area. Before the 10 year moves higher, price pressures must resolve itself therefore higher will take time.
From December’s 2.64 high to current May 2.16 lows at 48 points averages to about 10 points per month and fits exactly against the 11 point average range. An 11 point range for a yield at the top of the yield curve is quite stunning and reveals how dead are markets. An 11 point range factors to 0.5 per day in a 20 day trading month.
Brick walls for USD/JPY are located at 112.49, 112.64, 113.12 and 113.31. Most immediate is 111.40. Above 111.40 and 113.31 then USD/JPY is out of range. Out of range can only see 114.20, 114.89 and 115.41. I wouldn’t look past 113.31 as a target anytime soon. What is seen in USD/JPY is the same price pressures as the 10 year yield. USD/JPY at current price is to high. Below break points are located at 110.39, 109.60 and 109.34.
Why high volumes and interest in USD/JPY is due to competition in monetary policies. One side is the Fed’s hopes and dreams to raise while the BOJ embarks on an uncertain Yield Control experiment. Failure or success on either side will see high USD/JPY volatility.
The lesson in a monthly forecast 3 days before the new monthly data is not a good idea. Monthly forecasts are factored and traded upon new monthly data. View my many EUR/USD Vs DXY monthly forecasts for its accuracy and to highlight the value why monthly forecasts work at monthly starts. Because markets are currently dead, only slight changes should be seen in levels.
Other methods exists to view currency prices against yields. The yield not to view is the 10 year because its distance is far far away and because the range is dead. What actionable information does a dead 10 year range impart to lower yields. Accepted as gratis is the 10 year is the mid point when in actuality the mid point is the 5.5 year yield. A yield spread strategy requires understanding in each nations yield orientation, position and location. What appears uniform is never actuality. Then comes distance between yields, Correlations, which yield to trade against and yield crossover to each other. The 3rd cousin to the currency price is not an easy task to master.

Brian Twomey

GBP and Interest Rates: Levels, Ranges, Targets

GBP/USD ranged for the week 185 pips from 1.3042 to 1.2857 or barely 2% in total. FOMC, GBP/USD ranged 69 pips from 1.2998 to 1.2929. For the week, 185 pips factors to 37 pips per day. UK and all nations’ money markets are volatile and active. The UK for example ranges roughly 30 points per day or 150 actively traded points for the week. GBP/USD gained barely 35 pips above the UK money market range.
The problem inside all nations’ money markets is interest rate traders are practically trading the same old rates and ranges day in and day out. The daily changes to interest rates are slight. Interest rate traders by their actions are doing quite well but at the expense to advance interest rate causes and ranges as well as exchange rates. To ask the question will the BOE raise answers by why should the BOE raise when the system is functioning. A functional system in todays markets I term the containment policy as the same money sloshes around the same old daily rates.
I termed GBP a starnge currency pair when in reality GBP is a normal currency pair but its the interest rate traders responsible for containment of GBP. On Wednesday, FOMC, interest rate traders knew exactly GBP’s destination upon the FOMC announcement. How they knew is by the triggers that move exchange rates as every nation has its own distinct trigger. The trap nation and least understood in my estimation is USD because many triggers exist. Nation’s established their own interest rate system based on USD but against unique features to triggers, rates and ranges. So what is GBP but USD in another form. More later.

EUR/USD today’s vital points. 1.1123 V 1.1275.
GBP/USD. 1.2833 and 1.2872 Vs 1.2889 and 1.2928. Watch 1,2940 as this is the range point.
GBP/JPY. 143.04 and 143.48 Vs 144.09 and 144.53.

 

Brian Twomey

EUR/USD, USD and Fed: Levels, Ranges, Targets

The Fed statement claims desire to raise Fed Funds yet they switched from extreme bullish to raises to now data dependent . Most vital words to the data dependent switch is reinvest proceeds and accommodative policy. Accommodative policy or easy or loose money is why the statement stated long run interest rates will trade below what is expected to prevail in the longer run.
Expected to prevail refers to the Natural Rate of interest which means the FED is not hitting this point in raises anytime soon, possibly many years, if ever, in the future. The Natural Rate today I suspect without running new data is in the 1.50 vicinity. This number was based on the August 20 year average which I believe is far to low because its only 50 basis points from current levels. My speculation is easily 2.5 to 3.0. The key to determine exactly is to run 30 to 50 years of Fed fund data. What the Fed informs is they lack ability for multiple raises and a point I’ wrote many times because Fed Funds at 0.91 is skyrocket overbought. A 0.91 overbought means all Fed interest rates are overbought.
Why data dependent and why the low Natural Rate is the Fed is unwilling to allow the balance sheet to diminish. This means economic conditions years in the future will underperform as the FED can’t have it both ways. Accommodative policy informs this will be the case. Improved economic conditions and Fed raises runs counter to Accommodative and money in abundance as policy. Current Primary credit at 1.50 hardly allows consumers to purchase houses and autos nor can Loan growth be expected to rise.
What changes current policy is Trump must replace the Keynesians on the board and install Supply siders especially if Trump is to gain any economic advantage to tax cuts. Tax cuts under accommodative policy is a short term band aid and will outlive its effectiveness.
The remainder of the statement is smoke as is the tools to inform 80% chance of raise in June.
EUR/USD. Topside level for today is located at 1.1316 and not expected break as EUR/USD hits its limit at 1.1261 and 1.1287.

Longer term supports are located at 1.1102 and 1.1150. A break of 1.1204, targets 1.1191 and again 1.1176.
USD/JPY. Vital points are located at 111.32, 111.58 and 112.11 and 112.59.
USD/CHF. Vital points 0.9690 and 0.9712 Vs 0.9737 and 0.9759.
USD/CAD. 1.3350, 1.3380, 1.3415 and 1.3445.

Brian Twomey

EUR/USD, Trump, FED: levels, Ranges, Targets

As Trump’s Inauguration speech not only indicted an unresponsive political system inside a bloated government but Trump delivered this speech to the dignitaries, political party leaders and past presidents. We haven’t heard these words since Reagan left in 1988. Trump’s main point was Washington elites became wealthy as populations became poor. Now the political system spends its most unproductive days to tie Trump to Russia in order to destroy his presidency. The political class failed to read Walt Whitman’s Leaves of Grass, Do anything but let it produce Joy.
Trump’s greatest threat to the system is tied to economics. Capitulation to stimulus in 2008 changed economics from Reagan’s Austrian Supply Side to Keynes. New models were created in 2013 by central banks, called New Keynesians. Central banks apply the old tired equilibrium models to Keynes and it resulted in unproductive economics. GDP failed to produce a 3.0 reading in 8 years.
Why Trump’s tax fight will be massive is because if Trump is successful in passage then the economic system will switch again to Austrian Supply Siders and the pure price system. Austrian economics is a direct confrontation to Keynes top down, government control over the economic system. if government power diminishes then the private sector and masses becomes the beneficiaries. If Trump is successful then the Austrian price system will reign for many years in the future.
As the Fed Board constitutes a majority of Keynesians and Keynesians love stasis economic conditions, why the rush to raise Fed Funds is unknown yet I’m highly skeptical of the motivations. Interest rate rises and falls are traditionally based on current economic conditions not what might be the case in the future. Conspiracy would ask, is the economic system aligning against Trump as well.
EUR/USD. Big line breaks today are located at 1.1107 , 1.1244 and 1.1308. Yesterday’s 5 day average in the 1.1160’s is now 1.1181 and EUR/USD trades below. Noted point is EUR traded to the 1.1160’s as mentioned.
We continue to look for a lower EUR/USD to 1.1119. How this achieves is by breaks at 1.1147, 1.1133, 1.1125 then 1.1119. The level at 1.1125 is the current 10 day average and doesn’t require to pay much attention to it as the averages, as perfect as mine are, hold little credence to the daily system.
On a possible bounce today, targets and sell points are located at 1.1204 and 1,1229. Overall EUR/USD ranges are contained at 1.0931 and 1.0914 to many points in the 1.1400’s.
USD/JPY ranges as well as buy and sell points are located from 111.32 and 111.38 to 112.59.

Brian Twomey

Money Supply and EUR/USD: Levels, Ranges, Targets

From July 2014 to September 2014 began the ECB’s successive interest rate drops from positive to negative territory.
Eurozone M3 in 2014 was 10,108 billion. March 2017, M3 was 11,581 billion. In 3 years, M3 increased by 1,473 billion. The current Velocity of Euros equates to a paltry 0.000084 and this is obvious from slow M 3 growth. A higher GDP would see Velocity move faster. For now, Velocity, GDP and the overall Money Supply is dead and lacks movements.
Currency in Circulation in 2014 was 948 billion while March 2017 was 7390 billion. M1 matches money in Circulation at 7390 billion. Money in circulation difference equals 6442 billion which means 6 billion was added to Money in Circulation in 3 years at 2 billion per year.
Draghi’s QE program envisions bond purchases at 80 billion Euros per month or 86 billion USD. This means purchases at 7 to 8 times M3 at 11 billion. This is called economic stimulation.
The side issue to the intended article purpose is EUR/USD Correlates far better at upper 90% to its interest rates than M1 Money supply. If Draghi raises the money supply, laws of money and supply means EUR/USD and Interest rates will drop, particularly when the Correlation is strong.
In May 2014, EUR/USD began its descent from 1.3900 while the money supply was 10 billion. By September 2014, EUR/USD traded 1,.27000’s. EUR/USD trades today at 1.1200’s Vs 11 billion money supply. EUR/USD at 1.3900’s was already overbought from its multi year ascent which means it was dropping anyway, interest rate cut or not. How important is this data and what does it mean.
200,000 EUR/USD Futures contracts X $5,000 per contract = 1,000,000,000 billion or 1 billion.
200,000 EUR/USD contracts X 100,000 Euros per contract = 20,000,000,000 or 20 billion.
Traders pay 1 billion to trade 20 billion or 9 billion above M3. For M2 at 10,876 billion means trading 2x the overall Money Supply at 20 billion. M1 at 7390 means trading almost 3 times to 20 billion.
Overall 200,000 + Contract Volume was quantified as far to high and what reinforces this concept is 20 billion is to high. Futures contracts should trade directly around current money supplies.
Years ago, Soc Gen once performed terrific work on money supply issues but left in favor of mediocrity. A number of avenues exists to trade money supplies and quite successfully. The M2 and M3 relationship is the most favored trade as M2 is the long or short signal. Overall transmission must begin at Money supplies rather than interest rates first and this means yields become almost the 3rd cousin to the currency price as it applies to EUR.
EUR/USD. The ranges in EUR/USD opened extraordinarily wide in the last 2 days. The higher or lower break points are located at 1.1147 and 1.1313. I’m looking for this gap to close further over the next day. to see a better break point level. Ranges this wide in EUR is rarely seen.
In the way of 1.1147 is the 5 day average at today’s 1.1163. This area at 1.1160’s is vital because it represents a huge support level and must break for EUR to head lower. The 1.1160’s decides for EUR to reload longs or shorts will be the way forward. Below the 5 day to understand 1.1160’s is the 10 day at 1.1080. and a far distance. Short or long term from the averages, EUR remains and travels higher while overbought.
The bottom side breaks are located at 1.1201, 1.1187 and 1.1173. The point at 1.1173 reinforces 1.1160 won’t break today.
Above break points are located at 1.1259, 1.1284 and highly doubtful to see 1.1295 as EUR hits its high peak at 95.

 

Brian Twomey

EURO Money Supply

Eurozone M3 in 2014 was 10,108 billion. March 2017, M3 was 11,581 billion. In 3 years, M3 increased by 1,473 billion. The current Velocity of Euros equates to 0.000084.
Currency in Circulation in 2014 was 948 billion while March 2017 was 7390 billion.
200,000 EUR/USD Futures contracts X $5,000 per contract = 1,000,000,000 billion or 1 billion.
200,000 EUR/USD contracts X 100,000 Euros per contract = 20,000,000,000 or 20 billion.
Traders pay 1 billion to trade 20 billion or 9 billion above M3. M2 at 10,876 billion means trading 2x to 20 billion. M1 at 7390 means trading almost 3 times to 20 billion.

 

Brian Twomey

Currency Markets and Changing Volumes

 

A few short years ago, it wasn’t unusual for most widely traded EUR/USD to experience 500,000 futures contracts change hands on any given day. On significant price breaks or central bank meet days, EUR/USD traded as high as 750,000 contracts. Much has changed in FX markets as today’s 200,000 contract volume days trade at alarmingly and multi years lows.
A EUR/USD 260,000 contract volume day such as was seen last Thursday is considered not only an enormous trading day but 260,000 is 58,000 contracts above May 8 to 12 weekly high at 202,000 and far above the 52 week ago period at 107,000. EUR/USD at 260,000 is highest among all G10 traded pairs and light years above all cross pairs.
EUR/JPY for example as most widely traded cross pair every year since Triennial Surveys in 2001 barely experiences a 6,000 volume contract day followed by GBP/JPY at 200 contract days and 120 contract days for EUR/AUD. A 6,000 contract volume day for EUR/GBP is an enormous trading day.
Why 100,000 contract Volume days in AUD/USD is because NYMEX sets the daily standard for FE Iron Ore prices. China is the only other source to set Iron Ore prices outside Australia. Why 15,000 to 30,000 contract Volume days for NZD/USD is because of New Zealand’s Milk Futures, connection to the US by imports and most importantly, NZD money markets were established exactly as the United States methodology. Both AUD and NZD contract volumes are steady and explains why prices in both are stable.
USD/CAD’s 60,000 to 90,000 contract volumes far surpasses USD/CHF’s 30,000 to 45,000. Much explains CAD dominance. Most importantly is trade, economic releases same time as the US, relationship to banks and CAD’s built in daily volatility which far surpasses USD/CHF movements. CAD’s daily volatility even surpasses USD/JPY yet USD/JPY’s 150,000 to 250,000 contract Volume days easily defeats USD/CAD.
GBP/USD is an outlier and extraordinarily strange currency pair in construction and design for its movements but the 150,000 contract Volume days was the result of recent and significant price breaks otherwise GBP would resort to its standard at about 100,000 to 120,000 contract days. GBP/USD 1 year ago traded 87,000 contract Volumes.
The big 3 in volumes in order are EUR/USD, USD/JPY and GBP/USD although USD/JPY in certain weeks and days clearly beats EUR/USD. The EUR/USD and USD/JPY contention is what allows EUR/JPY to trade 6,000 contract volume days.
As the oldest and first ever indicator introduced to organized markets in the 1920’s, Volume in liquidity terms disappeared and this means implementation of tactical changes to trades based on and due to volume because FX markets changed and the alteration severely affects the price.
The overall purpose for Volume is to recognize price bottoms and tops. Best trades are taken when Volume hits extremes but no longer does volumes hit those limits. Volume is now a rangebound indicator and trades inside small channels which means prices lack the same speed to reach destinations as before when Volume was much higher.
A big 4 trading bank once released weekly volume reports and those reports identified currency pair extreme Volumes based on a + 1 and minus 1 calculation. No longer does the bank release those reports because its impossible at today’s low Volumes to reach scaled extremes.
As I calculated many currency pairs under the banks formulas only to find the impossibility to reach limits, the result is new methods to factor Volumes and extremes is required. A vast majority of currency pair Volume sits mid range which means Volume can trade a bit higher only to become overbought and track slightly lower only to become oversold. This leaves the currency price mid range in search of a break point and assist from Volume to take the price to its next destination.
Ironically, Voluime severely lacks variation which means the Volume Signal is astronomically to high at current contract Volumes. Volumes should and must decrease for EUR/USD, USD/JPY and GBP/USD while AUD/USD, NZD/USD and USD/CAD sit in comfortable positions. EUR/JPY Volume is far to high and despite currently low contract Volumes.
Lower contract Volumes means not only a slower price but more rangebound conditions. A currency price not only won’t find its break point but rangebound or lower Volume will ensure break points won’t be seen.
EUR/USD rose from 1.0400 lows in January to current 1.1200’s but at 200 pips per month factors to a trend at 10 pips per day based on 20 trading days per month. Roughly 200,000 contracts per day did this to EUR/USD otherwise as in days of old, an 800 pip move would’ve completed in 1 to 2 months instead of 4 months.
Markets in the US are clearly held and function by Eurodollar contract Volumes. Eurodollars was and always will be the highest Volume traded contract on the planet. Next in line are the 10 and 2 year yields, 5 year Note and 1 million contract Volumes per day in 30 day Fed Funds. Fed Funds at 1 million is severely low in relation to its 5 million contract Volume peak a few short years ago. Gold and WTI Crude are clearly well functioning markets and offers terrific opportunities. Gold for example offers contract Volume ranges from 150,000 to 300,000.
Roughly 300,000 EUR/USD contract Volumes per day left the market and no sign of a return. The assumption is 300,000 were speculators and found possibly opportunities in other markets. A further hypothesis is pure professionals exist in currency markets and they not only know the markets well but they know the exact break points.
GBP/USD traded 167,000 contracts Thursday as a result of the 1.2991 break and GBP skyrocketed 100 pips to 1.3049. Without the break, 100,000 contract Volumes would ‘ve traded. GBP Friday broke its significant 1.2995 against 96,312 contracts and climbed 44 pips. If currency markets truly professionalized then traders must adjust skills to this current class of traders.
EUR/USD Friday traded 201,000 contracts and the points to break above this week are 215,295 and 232,950. GBP/USD traded 96,312 contracts Friday and the points to break above are 113,129 and 113,969.
AUD/USD traded 77,642 contracts Friday and the points to break above are 83,006 and 96,058. USD/JPY traded 163,235 contracts Friday and the points to break above are 163,235 and 202,872. USD/JPY traded exactly at its contract break point at 163,235. EUR/JPY traded 2,391 contracts Friday and must break 3,311.

 

Brian Twomey

 

GBP/USD and GBP/JPY: Levels, Ranges, Targets

Yesterday’s GBP/USD breakout from 1.2991 and climb to 1.3047 saw 1.2991 hold. Today is another GBP/USD break from 1.2995 and jump to 1.3018. Must now look to range point at today’s 1.3121 to determine 1.3035 is the top and sell point. While 1.2995 is the actual break point, GBP also broke a range point at today’s 1.2999. GBP above 1.2995 and 1.2999 is not only a level break but a range break as well. This is significant.
More significant is GBP/JPY finally participated in today’s rise as the maximum level at 145.32 saw GBP/JPY dead stop at 145.31. In GBP/USD past breakouts over the past 5 months, GBP/JPY failed to track higher. This speaks volumes to a GBP/USD breakout higher as GBP/USD and GBP/JPY traditionally share a high 80% to 90% Correlation. For GBP/USD, GBP/JPY is the best correlated pair in the GBP universe.
The next level support below for GBP/JPY are 144.56 and 144.42 while most significant to achieve 144.56 is 144.60 as this represents today’s range point. What 145.32 means for GBP/JPY is the upper range point at 145.86. Today’s range is located from 145.86 to 144.60. Longer term, the GBP/JPY price is low and highly oversold.
Below for GBP/USD must break 1.2999 and 1.2995 to target next level at 1.2974 and much further below at 1.2924. Also mentioned many times the BOE view in GBP/USD is the 1.2300 to 1.2800 range. Today’s range point is actually 1.2898 yet levels at high 1.2880’s provided solid support over the past weeks. To even consider longer term shorts, the 1.2880’s area must break. On the MA side, the 20 and 200 day are primary GBP drivers and both are significantly overbought.
Yesterday’s EUR/USD finally saw the long point bottom at 1.1076 as EUR/USD then bolted to 1.1160’s. We’re looking for 1.1184 today to stop any higher movements.
The minority Democratic Party, the party that lost 1000 + seats under Obummer called for a Special Council and a Special Council was granted. Meanwhile Comey testified May 3, Flynn was clear of wrongdoing. Clapper, Comey and all congressional Intelligence committees stated in formal reports and testimony Trump was innocent, didn’t commit crimes nor was the campaign involved in any Democrat accusations.
The Special Council means this is only the beginning and it gets far worse from here because the Special Council has Subpoena powers . The Democrats through anonymous intelligence sources and constant news media barrage in more accusations against Trump will ratchet up the tempo to Obstruction and Impeachment to a screaming pitch. The Special Council appointment now means the Democrats manipulate Trump by himself and through the Special Council in a two pronged approach. Democrats play the long game strategy, never forget.
The Democrats don’t require correctness or proof in Trump accusations since its not the overall goal. The goal is maintain the daily barrage of charges to instill doubt in Trump, sway the agenda and force mistakes. Most revealing is the boldness Democrats are currently demonstrating. For 100 years, they mastered ability to hide who they are but today, Democrats are operating in plain sight.

Brian Twomey

EUR/USD: Levels, Ranges, Targets

For the past 5 months, one day within the month we’ve seen USD/JPY and GBP/USD experience a breakout. True to form for this month, GBP/USD hit its vital 1.2991 and bolted almost 100 pips to 1.3043. Why the dead stop at 1.3043 is due because its a most crucial range point and as mentioned many times, range points hold far more credence in currency prices than a simple trade able level. Far more important to 1.3043 is GBP/USD hit 1.3045 and violated 1.3043 by 2 pips.
This violation even by 1 or 2 pips might seem trivial but its profound in currency prices as it normally means GBP/USD over next days will travel higher. Its a central bank market message as to how to view GBP over next days. Ask yourself, why not dead stop at 1.3043 and at the exact range point. Why the violation. I’ve seen this violation situation many many times and over a long long period. The violation warrants caution.
In the Federal Register over the past 8 years, Obummer implemented 30,000 + regulations to the point literally to regulate the number of sugars allowed in coffee, school lunch calories. Its a mouth dropping read for interested but scary as its perfectly tied to Mao’s regulatory plan under the 10 year Cultural Revolution.
Yet the Obummer story has never been told nor may ever be told because 30,000 regulations X 2 and 3 pages per regulation equates to roughly 75,000 pages to read. The plan was overwhelm the system and explains why the past 8 years experienced zero growth, zero capitalism, complete stasis. Trump’s Executive Order states 2 regulations disappear for every new regulation implemented. To undo 30,000 regulations could take years upon years and it means the Obummer effects are with us for quite some time in the future. One can understand Trump’s war on Republicans as much as Democrats because over 8 years, Republicans suffered Stockholm Syndrome and allowed Obummer to operate freely.
More important is the economic front. Regulations on Banks, Insurance, Healthcare, Coal and many other industries means the companies involved in these industries will take years to retain their normal, capitalist and profit methods. The Obummer plan to regulate Coal and even highest grades of coal, was to revert to Natural Gas to heat and operate inside all indoor structures in America. This means all newly built structures would retool to serve Natural Gas but under the strictest of regulations as Obummer retains its power and control. Its all in the Federal Register and its written clearly.
EUR/USD supports below are located at 1.0985 and 1.1037. EUR/USD remains light years overbought from its prior break points at 1.0723 and 1.0843. More closer to home, overbought as well is seen from averages 20 to 200 days. The overbought 20 day at 1.0933 corresponds to today’s 1.0985 as both share overbought status.
On the upside, resistance is far and located at today’s 1.1216 and 1.1269. The upper and lower range is found at 1.1037 to 1.1216. Today’s ranges for EUR/USD expanded widely from their normalized multi month intervals. EUR/USD among the 10 we trade daily is the only pair to experience wider ranges and I see it as attributable to yesterday’s Trump dilemma. The ECB are masters to maintain and much prefer to see shorter ranges in EUR. On the USD side is a slight compression in those ranges particularly in USD/JPY.
We’re looking for EUR to travel back to the 1.1071 area and our long point for the day. EUR/USD arrives at this point by breaks at 1.1099, 1.1085 then 1.1071.
USD/JPY for the day must cross 111.04 and 111.19 to range between 111.19 to 111.75.
 

Brian Twomey

Trump Inauguration Speech

 

Synopsis. Trump to Democrats and Republicans, Lobbyists, Interest Groups, Wealth gained from Government Power, Agency heads, Corporate CEO’s, you all are finished as business as usual is done. Government power transfers back to rightful owners, the people. Trump’s speech indicted entire DC past and present. Interesting line, dear people this is your celebration and transfer to rightful owners. The Bible in Leviticus 23 and 25 addresses numbers, meaning and Jubilee years when year 49, celebrations from property transfers back to rightful owners.

 

Today’s ceremony, however, has very special meaning. Because today we are not merely transferring power from one Administration to another, or from one party to another – but we are transferring power from Washington, D.C. and giving it back to you, the American People.

 

For too long, a small group in our nation’s Capital has reaped the rewards of government while the people have borne the cost.

Washington flourished – but the people did not share in its wealth.

Politicians prospered – but the jobs left, and the factories closed.

The establishment protected itself, but not the citizens of our country.

Their victories have not been your victories; their triumphs have not been your triumphs; and while they celebrated in our nation’s Capital, there was little to celebrate for struggling families all across our land.

That all changes – starting right here, and right now, because this moment is your moment: it belongs to you.

It belongs to everyone gathered here today and everyone watching all across America.

This is your day. This is your celebration.

 

But for too many of our citizens, a different reality exists: Mothers and children trapped in poverty in our inner cities; rusted-out factories scattered like tombstones across the landscape of our nation; an education system, flush with cash, but which leaves our young and beautiful students deprived of knowledge; and the crime and gangs and drugs that have stolen too many lives and robbed our country of so much unrealized potential.

This American carnage stops right here and stops right now.

 

 

USD/JPY and Trump: Levels, Ranges, Targets

After the Democratic party 4 months later failed to find evidence to the Trump /Russia campaign collusion, the attack on Trump enters a new phase as intelligence was shared with the Russians. Its not enough anonymous NSA sources are dropping false information but the Telestrator assisted by Democrat partners in the news media report the story every which way possible 24 hours per day, 7 days per week. Two aspects are at work and all lead to further chaos.
Trump is moving swiftly to eliminate Obummer’s economic punishing regulations. Read a few hundred regulations from the Federal Register as I did then look closely at Mao’s Cultural Revolution and one will find Obummer followed Mao’s regulation plan to perfection. Obummer and the Democrat Party goals were regulate Social, Cultural, Political and economics to the point to stop America dead from movements. Stop America solidifies Democrat power for decades in the future under Joe Stalin, Mao controls. The Democrats must stop Trump or Obummer’s legacy and modus operandi will be unveiled.
Democrats next phase plans were foiled when Hillary lost in what was suspected as a sure win. Who is D.C outisder Trump but a thief who stole the election. Through newly formed Democrat organizatios and NSA connections, anonymous sources worked 4 months to release false NSA information and to prove the Russia campaign connection and hence declare Trump an illigitimate president. The overall Democrat goal is to break Trump psychologically. America is at war and the Democrats are on the offensive.
Trump needs the sleepy Republicans to resolidify their power and fight the Democrats with a sledge hammer. Eliminate daily press briefings is a small start as the press is Trump’s greatest enemy. Trump should pardon Flynn, fire every Obummer employee in intelligence and parade the guilty in handcuffs in front of America. Top Democrat intelligence figures are perfect targets for arrest and jail, Hillarious included. If Trump doesn’t find a sledge hammer then chaos ratchets up many more notches.

USD/JPY hit reported 113.75 and bolted lower to next reported level at 112.93. USD/JPY now sits far oversold at 112.76. Most vital supports are located at 112.30, 112.43 and 112.78.
Above points are located at 113.09, 113.69 and 114.12. At 114.12 was this morning 114.20. Range breaks overall remain 111.00’s to 115.00’s. Specifically 111.48 below. Confirming to oversold is EUR/USD is far overbought.

 

Brian Twomey

USD/JPY: Levels, Ranges, Targets

From the business pages of a leading Japanese publication is the question where would the Japanese 10 year yield be located if QE Yield Control wasn’t implemented. The current Japanese 10 year trades 0.047 while the Theoretical value based on publication formula is 0.14. In 8 months of Yield Control implementation at USD 731 billion per month, the BOJ bought themselves about a full point. This equates to a total at 8 months at 5848.00 Billion USD. The BOJ now owns 40% of the JGB market.
The other interesting aspect to 0.14 if memory serves yet written in these pages, Taylor Rules places interest rates at 0.1. The 0.1 level is located above the 10 year, below the 15 year but most important above Japanese Call Rates. The Japanese yield to hit the negative target may require an interest cut to save the Japanese as Call Rates literally moved from 0.941 January to 0.952 today.
At Japanese budget time in April, the Call Rate traded 0.963. JPY/USD trades 0.008802, JPY/EUR 0.007960 and it is these exchange rate where the Japanese mastered offshore rates as Euroyen trades far above all short term interest rates. Repatriations and interest profits for Japanese banks always occurred in Japanese afternoons.
Most vital levels for today’s USD/JPY are located at 112.93 and 113.13 Vs above at 113.75 and 114.20. The overall range is located from 111.00’s to 115, specifically clustered at 115.12 and 115.14. USD/JPY won’t easily walk through both range points. Below 113.12, next comes 113.05 and the bottom cluster at 112.93 and 112.91.

 

Brian Twomey

EUR/USD and Yield Methodologies

 

 
The difference between USD and German Yields 2 to 10 year for EUR/USD is USD provides prediction for tops and the distance from USD alone is extraordinarily wide from EUR/USD current price. German yields forecasts bottoms and on its own volition, the distance is extraordinarily wide from EUR/USD current price. If German minus USD yield spreads are factored to current EUR/USD at the 1.0931 close then the distance to current price becomes even greater than yields factored by themselves. The same principle holds for USD minus German yields, a EUR/USD price fails to be found yet ranges were known. Yields were matched as 2, 3, 5, 7 and the 10 year.
If German yields either refactored to interest rates from spreads or on their own against USD then again a EUR/USD price is not found. A foreign bond trades 0.01% yet USD is quite different.
To understand distance as a USD example, 30 year Treasury yield is priced in 32nds and priced at $312.50 for each 32nd or $3,000 per point. One basis point on a 10 year bond is $1000.

From fraction to decimal,
1/32 = 0.0313,
3/64 = 0.0469,
1/16 = 0.0625,
5/64 = 0.0781.
At 63/64 = 0.9844 then comes 1.0 as a fully traded basis point.
From Fraction to percent,
1/32 = 3.125%
3/64 = 4.687%
1/16 = 6.25%
5/64 = 7.812
63/64 = 98.437%. Then 1.0 as a fully traded basis point.
The average for USD yields is 1.8120 while the German average is minus 0.2494 or 0.7506 as an interest rate. The Correlation between USD and German yields factors to 0.96% and R2 at 90%. The Correlation range is narrow at the 0.97% upper richter scale limit and lower bound at 0.57%. Narrow defines USD Vs German yields range from 1.6847 to upper level at 1.9391. German yields Vs USD ranges from minus 0.3797 to minus 0.1201. Both USD and German yield distances statistically from upper to lower runs 0.25 yet distance between both runs 0.125.
Current USD and German yields are tightly married and warns of a huge breakout. Until the breakout materializes, EUR/USD will range from 1.0800 to 1.1100. The noted point to yield marriage is we’ve seen this story many, many times before. While 1.0800’s to 1.1100’s are current range break points, actual trade ranges in the last 4 weeks traded 178 pips, 122, 225 and 168.
USD
2y at 1.29 X 1.0931 = 1.4100 EUR/USD. Then 1.29 Divide 1.0931 and 1.0931 divide 1.29 = 1.1801 and 0.8473. Mid point = 1.0137.
3y at 1.48 = 1.6177 EUR/USD. Then 1.48 divide 1.0931 and 1.0931 divide 1.48 = 1.3539 and 0.7385, Mid point 1.0462.
5Y at 1.84 = 2.0113 EUR/USD. Then 1.84 divide 1.0931 and 1.0931 divide 1.84 = 1.6832 and 0.5940. Mid Point 1.1386.
7Y at 2.13 = 2.3283 EUR/USD. Then 2.13 divide 1.0931 and 1.0931 divide 2.13 = 1.9485 and 0.5131. Mid point 1.2308.
10Y at 2.32 = 2.5359 EUR/USD. Then 2.32 divide 1.0931 and 1.0931 divide 2.32 = 2.1224 and 0.4711. Mid Point 1.2967.
Synopsis. 3 and 5 year yields currently dictate EUR/USD. Factor 3 and 5 year yield spreads then EUR/USD bottoms are located from 1.0275 to 1.0568.
German.
2Y at minus 0.665 = 0.4281 EUR/USD. Cross divide = 0.6083 and 0.4281. Mid point 0.5182.
3Y at minus 0.662 = minus 0.7236 EUR/USD. Cross divide = 0.6056 and 1.6512. Mid Point 1.1284.
5Y at minus 0.316 = 0.7771 EUR/USD. Cross divide = 0.2890 and 0.7771. Mid point 0.5330.
7Y at minus 0.036 = 1.0571 EUR/USD. Cross divide = 0.0329 and 1.0571. Mid Point 0.5450.
10Y at 0.392 = 0.4284 EUR/USD. Cross divide = 0.3586 and 2.7885. Mid Point 1.5735.
Synopsis. Despite appearances at the 5 year, EUR/USD price is absolutely dictated by the 3 and 5 year yields. The 5 year is most crucial as it informs not only the EUR/USD top but if EUR/USD breaks above then light years of distance exists to EUR/USD maximum at 1.1700’s. Further, a break above the 5 year would create massively wide EUR/USD ranges and increased volatility.
Currently, the 5 year and EUR/USD are both at uppermost inflection points. Why the massive distance on a break of the 5 year is because the 7 year yield is far to high. The 5 year is not expected to break because the 7 year purpose at current price is designed to contain EUR/USD and the 5 year to maintain a lower EUR/USD.
Further, the 3 year yield offers far more downside to EUR than the 5 year offers on the upside break. The 2 and 3 year are extremely close to bottoms and explains why we’ve heard recent ECB speakers speculate on interest rate rises. The crucial ECB question is would the ECB allow a higher EUR on a rate hike as lower yields would also rise. Or would the ECB raise after Yellen so a rise would allow EUR to start from a lower base due from Yellen.
Overall, yields contain deceptive qualities as 1 or possibly 2 yields may be to high or to low in relation to each other as is the 35 basis point case in the 3 to 5 year. From the 5 to 7 year yield offers 28 upside basis points while 35 is current distance from the 5 to 3 year. Statistics offer a more solid revelation at a 0.25 range and 0.125 intervals between USD and German.
Brian Twomey

EUR/USD and USD/JPY: Levels, Ranges, Targets

 

USD/JPY break points today are located at 113.63 and 114.03 Vs 114.58 and 114.86. The bottomside are odd numbers while the topside breaks are even. The break points are not only perfect but trade information was known yesterday because its USD. We’re running today Gaps 28 Vs 40 below.
Yesterday’s EUR/USD break reported at 1.0861 was actually 1.0858. A EUR/USD forecast at 4:00 am EST will be off by 2 to 4 pips. At 5:30 Am EST, EUR/USD transforms to re price for the new day as yesterday’s information becomes pablum.
Problem at 5:30 am is Eupopean news is released at the same time as the new prices. Part of the EUR/USD volatility at 5:30 is derived from new prices and the other half to price the news release. Therefore a news release at 5;30 encounters possible deception particularly when the release encounters wild volatility. Likewise, a news release may encounter zero to low volatility as a result of the re price to EUR/USD. Most news release volatility is the result of EUR reprice because numbers to releases are extraordinarily small and because most are released as consensus forecasts. An off consensus release sees a combination of the re price from the release as well as the reprice of EUR.
EUR/USD break points today are located at 1.0751 and 1.0810 vs 1.0944 and 1.004. Is a 59 Vs 60 pip balance correct, no because its off from the correctness in USD/JPY. Further, to many even numbers in EUR and it doesn’t match its USD/JPY counterpart.
EUR/USD will reprice to reflect its USD counterpart because USD is correct and off balance as known from yesterday. When EUR reprices then all cross pairs will also re price. A support or resistance point as well as an average therefore is off before 5:30. Before 5:30, does cross pairs drive the underlying currency pair or does the cross pair drive the underlying pair.
All currency prices are derived from a 24 hour period but 24 hours is a deception because every currency pair runs differently on its 24 hour scale. This means, certain times of day are perfect to trade while other times are untouchable. Untouchable means as a general rule literally don’t touch the pair no matter what happened in its price path. GBP is not ready at 4:00. If the vital levels and break points are not known before hand then the trade is left to speculation and a gamble.
The way round a prior 5:30 am trade is to understand how to adjust supports and resistance points and its done in relation to daily pip ranges. Currency trading is an exact science and not an art or a speculative venture. USD/JPY gaps are running 28 and 40 today yet the daily pip range is 58 pips. This means good chance for a breakout today yet support and resistance points are running today at 7.25.  Since range breaks are located from 115’s to 112’s, a breakout means only break of the daily levels. USD/JPY becomes crucial if range breaks are seen because they hold far more credence than a daily break point. A break of 115 or 112 means USD/JPY higher or lower.
The currency pairs ready to trade becomes the lead currency pairs. Traditionally, AUD and NZD lead EUR while GBP also leads EUR. After 5:30, EUR becomes the overall leader against all currency pairs but its balanced against USD. AUD, NZD and GBP then find their place in between EUR and USD. In the larger scheme, CAD leads JPY and CHF as usual remains the colossal laggard. Its historic for CHF to lag CAD and JPY.

 

Brian Twomey

EUR/USD and USD/JPY: levels, Ranges, Targets

Yesterday’s USD/JPY break points above were located at 113.82 and 114.36. USD/JPY dead stopped at 114.32 and reversed. Mind the Gap yesterday as today and Mind the Gap on any continued USD/JPY longs. This Gap will be monitored over next days as its the main driver to USD/JPY. The Gap was valued at 54 pips yesterday while today’s Gap is valued at 47 pips from 114.22 to 114.69. The Gap is the current Statistical Price Path in USD/JPY rather than a technical chart pattern as I left technical chart patterns many years ago. Main point is the levels are perfect as we don’t have time for speculation. Respectfully.
A lower USD/JPY must break tough supports at 113.49 and 113.57. A break of 113.49 converges against 113.43 then comes 113.29.
EUR/USD is trapped below by 1.0821 and 1.0764. The bottomside to EUR/USD drops 15 pips from yesterday. The 2 main break points below are 1.0861 and 1.0843. At 1.0821 is not expected to break today nor 1.0764. At 1.0764 is the must break point where any longs are finished.
On the topside, most vital break point is 1.0955 and not expected to break. A break of 1.0955 assumes USD/JPY breaks 113.49.
Commerce Sec Ross stated yesterday, 3% won’t be seen in 2017 while Fedspeakers continue to harp on in regards to improved economic conditions ahead. Ross is the one whose words are valid. What’s 3% topside means is GDP should range inside 1 to 2%. Samll range and informs no big dramatic moves in FX pairs but rather slow grinds.
On the Political front, mentioned Hillarious and Obummer will be back in fullforce. Both are back in less than 100 day absence. Add Biden and Jarrett now out to this dangerous duo and trouble exists ahead for Trump and the Political system. Last, Trump’s rescue and success is confront and eliminate the 100 year Democrat network.

 

Brian Twomey

USD Pairs: Most Important

 

USD/CHF. 0.9969 and 0.9976 Vs 1.0027 and 1.0034

USD/CAD. 1.3662 and 1.3671 Vs 1.3741 and 1.3750.

USD/JPY. 113.09 and 113.17 Vs 113.82 and 114.36

USD/SGD. 1.4036 and 1.4046 Vs 1.4117 and 1.4127

 

Many many more USD Pairs for interested. Trade Service Open.

Brian Twomey

 

AUD Cross Pairs: Most Important

 

AUD/CAD. 1.0011 and 1.0051 Vs 1.0062 and 1.0102.

AUD/NZD. 1.0646 and 1.0688 Vs 1.0701 and 1.0743.

AUD/JPY. 82.86 and 83.29 Vs 83.55 and 83.61

AUD/USD. 0.7303 and 0.7332 Vs 0.7341 and 0.7370

 

Brian Twomey Trade Service Open

GBP/USD and Cross Pairs: Most Important

GBP/USD. 1.2888 and 1.2919 Vs 1.2953 and 1.2983

GBP/JPY. 146.33 and 146.58 Vs 147.31 and 148.01

GBP/CHF. 1.2885 and 1.2916 Vs 1.2949 and 1.2980.

GBP/CAD. 1.7665 and 1.7707 Vs 1.7753 and 1.7795

GBP/NZD. 1.8725 and 1.8770 Vs 1.8819 and 1.8863

GBP/AUD. 1.7566 and 1.7608 Vs 1.7654 and 1.7695

 

Brian Twomey, Trade Service Open